No plan to hike gold import duty despite Modi's appeal to skip buying, says government official

New Delhi | Kolkata: India has no plans to increase import duties on gold and silver imports, a government official said on Monday. The comment comes a day after Prime Minister Narendra Modi urged citizens to avoid purchasing gold for a year amid the economic pressures from the Iran conflict.

India is the world's second-largest consumer of gold and the largest consumer of silver, relying heavily on imports to meet domestic demand. "At present, there are no plans to raise duties on gold and silver imports," said the official, dismissing concerns over possible curbs on international transactions.

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India's gold imports rose 24.1% year-on-year to $72 billion in FY26, while silver imports surged 149.6% to $12.1 billion. Together, the two metals accounted for 10.8% of the country's total imports in the last fiscal year.

Higher gold imports, combined with elevated crude oil prices, can widen the trade deficit and increase pressure on both the rupee and foreign exchange reserves.

The gold trade, however, fears a duty revision, and said it could bring more household gold into the market as consumers may get higher prices for their holdings, while also putting a check on investment demand for gold, which in turn could help rein in the current account deficit.

"Smuggling, however, will rise if the import duty is hiked. The import duty may go up steeply to 15%," said Surendra Mehta, secretary of the India Bullion & Jewellers Association (IBJA). Joy Alukkas, chairman of the Joy Alukkas Group, said, "The immediate impact will be on business, which could decline by 15%."

Shares of Titan fell 6.73%, Kalyan Jewellers 9.27% and Senco Gold by 8.52% following the Prime Minister's announcement. Prior to the lowering of import duty to 6%, nearly 100-120 tonnes of gold used to enter India through the grey market.

"With nearly 20,000 tonnes of gold lying idle in Indian households, there is a strong need for the government and industry stakeholders to work together to mobilise this dormant asset. Given the Prime Minister's commentary, there is also a possibility of an increase in gold import duty going forward," said Suvankar Sen, MD & CEO of Senco Gold & Diamonds.

At the same time, the jewellery industry is already adapting through lower-weight and lower-carat products to maintain affordability for consumers. If these trends continue, India's annual gold imports could potentially decline to nearly 550 tonnes, compared with the historical average of around 700 tonnes.

The solution may not lie only in reducing demand, but also in unlocking the immense value of existing gold through a transparent and regulated Gold Monetisation Scheme (GMS). "A revitalised, jeweller-integrated GMS can help mobilise idle household gold, reduce dependence on imports and strengthen the formal economy," said Rajesh Rokde, chairman of the All India Gem & Jewellery Domestic Council.

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The size of the Indian gold industry was ₹7,51,490 crore in 2025 in value terms and 710.9 tonnes in volume terms, according to the World Gold Council. Of this, jewellery accounted for ₹4,54,390 crore (430.5 tonnes), while investment demand stood at ₹2,97,100 crore (280.4 tonnes). Organised retail jewellers such as Tanishq, Kalyan Jewellers, Malabar Gold & Diamonds and Senco Gold account for 35% of the market, while the rest is dominated by unorganised players.

The digital gold segment, which has been growing rapidly, is also likely to be hit by the Prime Minister's announcement. "The business may get impacted in the short term. We have to wait and watch," said Gaurav Mathur, MD of SafeGold, a digital gold platform. "If consumers respond positively to this appeal, even a 25-50% reduction in gold demand could significantly ease pressure on India's foreign exchange reserves and help stabilise the rupee against the dollar," said Mahendra Luniya, chairman of Vighnharata Gold, a Pune-based digital gold platform.

Interestingly, a similar situation was witnessed during 2012-2013, when India's current account deficit and pressure on the rupee increased sharply. To control gold imports, the government introduced the 80:20 rule, under which only 80% of imported gold could be sold domestically, while 20% had to be re-exported as jewellery before fresh imports were permitted. Banks and traders also faced tighter restrictions, import duties were raised significantly, and overall gold imports were closely regulated.